Incase of adequate profit,  dividend from surplus shall not exceed preceeding 3 years average. Incase a company had declared dividend of 10%, No Dividend (0%) & 14% in last 3 years, Then in current year what's the maximum it can declare? Whether 7% or 12%?

1 answer

Ravi Staff March 22, 2018

Extract from Rule 3

The rate of dividend declared shall not exceed the “average of the rates at which dividend was declared” by it in the three years immediately preceding that year:
Provided that this sub-rule shall not apply to a company, which has not declared any dividend in each of the three preceding financial year.
Conclusion
From above it is clear that we have to take average of only those years where dividend is declared so if no dividend is declared then that year should be excluded so we will consider only 10 & 14 and average will be 12% 

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